How Vari’s Digital Transformation Prepped It for a Pandemic-Prompted Sales Surge

The change from DTC to B2B for office furniture retailer Vari was a tremendous shift that required pivoting the company’s strategy, people and technology. As part of this, it needed to evolve disconnected legacy systems that had created disjointed and siloed customer interactions. What’s more, three weeks before the COVID-19 pandemic erupted, the company changed its brand name and launched a new website — and was immediately confronted with an influx of new customers searching for home office goods. We explored how it navigated this immense disruption to great success in the “How Vari is Adapting to the Digital First World” webinar. Read on for an edited version of the transcript and the presentation slides. Tim Denman: Welcome everyone, to the “How Vari is Adapting to the Digital First World” webinar, which is part of the Talking Tech 20-minute webinar series, hosted by RIS News and Consumer Goods Technology and presented in collaboration with Salesforce. I am Tim Denman, editor and chief of CGT and RIS, and I thank you for joining us today. With me to discuss how workplace innovation company Vari is creating superior digital experiences across e-commerce, marketing and service, are Vari senior director of technology, Jason Belote, and Salesforce global head of retail industry, GTM, Alex Drinker. Jason and Alex. Thanks for taking some time today. So let's jump into the conversation. Alex, why don't you kick us off? Alex Drinker: A great thanks, and thanks again for having us. I'm Alex Drinker. I lead the retail go to market team at Salesforce. And before I begin, I just want to give a quick reminder that customers should base their purchasing decisions on products and services that are currently available. So, I'm going to talk to you a little bit about some insights that we have, and then bring in our guests to talk about Vari and how they're adapting to digital transformation in this new normal. I'm going to share with you a little bit today based off the unique data set that we think tells you the what and the why of shopping. The “what” is our platform data with over a billion consumers on our platform. And the “why” is from global surveys industry shopping studies that our team conducts to understand what drives consumer behavior. And with every click, tap consumers are leaving behind the digital footprint and these footprints make us more intelligent around consumers, wants and needs. And really we've synthesized this data into our insights today that I'm going to share with you. So, just taking a look here, this graph demonstrates the leading indicator and digital revenue growth against COVID-19 cases. And since we started tracking this and kind of mid-March when the WHO declared a pandemic and cases began to rise globally, e-commerce spend also increased the social distancing policies store closures, and other safety measures were implemented. And you can really see how that's tracked and how unfortunately it's starting to track again, but I wanted to go over some new consumer behaviors that have really, we've seen in this new normal. Interactions that once took place in person, in store and in the office are occurring almost exclusively through digital channels. And subsequently the pandemic created a permanent shift in consumer behaviors. We're seeing the emergence of all this, the sort of what we call The All Digital Shopper. And according to the Salesforce shopping index that I previously mentioned, global digital revenue in Q2 grew by an unprecedented 71% compared to the previous year. And we've continued to see growth even as physical storefronts around the world started to re-open in May. Sites advertising by online curbside pickup options saw digital revenues grow by 127% every year, and meanwhile sites that operate physical stores, but did not offer a pickup option only grew by 54%. And then in purchases from a social channel referral saw the biggest increase in Q2 growing 104% across the entire industry. Overall, over 30% of sales were made through digital channels. So you can just see the tremendous shift that we expect to continue as we come out of the pandemic. Now let's take a closer look. Consumers are moving online, but that's not the only change. I think shoppers are adopting new methods, new brands, new retailers, as you can see in the chart to the left and many intend on keeping these new habits. Thirty-seven percent of shoppers have tried a different brand since COVID-19 started, and 79% of those consumers and tend to continue using these new brands. But really why the change? I think the two that we're seeing is price and product availability. So, let's keep talking about the online sales or on the subject. Now typically when we see surges and digital activity, conversion rates go down, they get a bit diluted. And if you think about how you calculate conversion rate, it's the rate of transaction per session. You'd imagine if there's a surge in sessions, more people going on store sites, conversion rates would go down, typically. Average, you can see in the chart, the conversion rate growth in Q2 2020 skyrocketed. So not only are we seeing a 40% increase in net new online shopping, more people browsing online, they are also making those purchases. They aren't just window shopping and they mean business and they're more intentional than ever before. So our recommendation to our customers has been to make sure their desktop and especially mobile sites are prime for making this, that transaction from item discovery to check out. And really speaking of holiday, and what we're looking at now, is we've asked thousands of shoppers, how they intend to make purchases this holiday. And now there's a lot we could chat about this chart. You can see how shopping is increasingly distributed across channels with a slew of mediums growing in popularity. What I’d like for you to focus on is that while yes, shopping online will be huge this season as I mentioned, we're expecting 30% of retail sales to be online twice as high as ever, but 75% of consumers expect to do at least as much in store shopping as last year and 80% will do as much or more buying online and picking up in store. And so really what does that mean for you and what does that has that meant for our customers? And I think it's imperative that brands embrace change and reimagine the customer experience for today's Digital First Shopper. The importance of digital came to life for retailers who had a matter of 90 days, accelerated their decade long transformation efforts to maintain business continuity and stay afloat. You know, Adidas like many others who closed all their physical stores, shifted their sales to e-com. Kind Snacks recognized and untapped direct to consumer opportunity by creating a new digital channel to reach customers directly online. They further differentiated their DTC channel through a build your own box subscription service. Ralph Lauren launched a digital partnership with Snapchat, allowing users to dress their Bitmoji on Ralph Lauren attire, all of which are purchasable online and in stores. And then furniture chain, Ethan Allen created an in-home hap where customers can visualize products in their own home. And of course, Vari who were are about to talk about now, who are truly a trailblazer and managed this digital transformation flawlessly. So there's never been a more critical time than now to digitize this relationship you have with your customers. And for those who haven't started their digital transformation now is the time. And for those who have its time to further evolve your digital strategy to meet shoppers where they are across any channel device or app. So like to take a second now to highlight are truly trailblazer and Jason Blot, Vari, and talk a little bit about, his background and what they've gone through throughout this new normal. So, Jason, thanks for joining. Belote: Thanks for having me, Alex. Drinker: Could you first start off by just sharing a quick background about yourself? Belote: So I lead the Salesforce team within our technology group here at Vari. I joined Vari in 2018 and I spent the first 18 months rolling out our new Salesforce platforms. And now that our technology foundation has been laid, we are now focused on really diving deep into the platform, and trying to continue to innovate and deliver improvements to drive our business strategies. Prior to Vari, I led the CRM technology team at Sabre. And then before that I was a CRM consultant at Salesforce. Drinker: That's great. Thank you. So could you share a quick overview of kind of Vari and your role there and what you've been up to? Belote: Sure. We started back in 2012 with one product, our original Varidesks; standing desktop converter. And since then we've seen rapid growth. So we went from two employees to more than 350 employees today. We have over 3 million fans in 120-plus countries, and we are 98% of the Fortune 500 companies. And then in 2018, we actually expanded from that single product into a full line of office furniture. And so we now sell things like standing desk, conference table, storage, seating and even accessories like lights, movable walls, privacy booth, phone booths, and power options. And we have over 300 workspace products in our pipeline, the rollout over the next 24 months. And then in 2019, we entered the commercial real estate area with our VariSpace as a service concept. And so far space locations are Class A workspaces that bring first-class amenities and flexible space solutions together into a multi-tenant campus ideal for enterprise level tenants. We now have two locations in the Dallas area. VariSpace, Las Colinas and VariSpace, South Lake. And then in February of this year, we actually announced a multimillion dollar rebrand where we changed our name from Varidesk to Vari. And the reason for that is to showcase really, our evolution from that single innovative product into a workspace innovation company. Drinker: That's a lot of work and I got to say probably pretty good timing during this period where there's this digital surge. And obviously a lot of people working from home. I can tell you when I realized we'd be working from home for a while, my first step on my Google search was looking for a new standing desk at home. So I'm sure you guys could track my journey as I went throughout that. So you mentioned 2018 being kind of a change and Vari has gone all in on Salesforce. Just love to know what kind of drove this decision. Belote: So, like you said, in 2018, we were actually kind of pivoting a little bit, we're moving more to a B2B sales strategy. And so this was a tremendous shift for our company. We previously sold just direct to our fans with an e-commerce focused approach, but to penetrate the B2B market we felt like we needed to pivot both our strategy, our people and our technology. And so this really meant evolving from our current disconnected legacy systems that really created a disjointed and siloed customer interaction. And so we knew we needed a strategic platform and a strategic partner to really connect all the fan experiences seamlessly all while adapting and scaling going forward. And so we partnered with Salesforce. And so now, like I said we rolled Salesforce out over the last 18 months. And really now we have an end-to-end solution from social media marketing, and -commerce all the way to sales and customer experience. So all the way across our business and these solutions really allow us to bridge the digital and data divide with customers and across our internal business units. Drinker: Yeah, that's pretty amazing. I just joined Salesforce about four months ago and we did a similar transformation when I was running marketing for a brand called Shinola out of Detroit. And it's that true omnichannel connection that has that single source of truth for the customer that I think is so important in these days, when you're tracking some of your customers from different points of purchase. So, with the onset of COVID, what are the areas of the business that you've needed to pivot with, and how has maybe Salesforce played a role in that pivot? Belote: Yeah, sure. So we actually changed our brand name and launched Vari.com, which is powered by Salesforce Commerce Cloud, three weeks before COVID hit. So it was in February. And at that time we were starting to execute on our new B2B strategy and then suddenly overnight people were working from home. And so fortunately we had a business and a technology platform that allow us to pivot our efforts and resources very quickly. We saw a major demand, as you said, a major demand for work from home products. So people really wanted to upgrade their home workspace. You know, leaning over the kitchen table or a hunching at the couch just wasn't cutting it anymore. And so to help enable that for the first time we issued our first online promo code, to really try to capture that work from home business. And so that actually included a promo code for the public, as well as for corporations like Google, who gave their employees a stipend to create a home office. And one of the products we've really seen the highest demand for is our electric standing desk. And so people, really quickly figured out that they miss their standing desks that they had at work. And so our web store was actually seeing a 300% increase in that product over the prior period during the COVID pandemic. Drinker: That's incredible. Yeah. I mean, like I was saying earlier with my search to try to figure out, to be a little bit healthier at home standing desks for the first thing I pivoted towards. And I know after seeing all my colleagues on chat, that I'm not alone in that venture. So I'm glad that's turned into increased sales for you all. And I hope that continues. Speaking of, kind of the customer experience that we're talking about before, how is Vari re-imagining customer experience in this digital first world? Belote: So we continue to leverage our commerce and marketing platforms to drive our B2C channel and our work from home programs. But we're additionally working to expand our capabilities and really drive our longer term strategy around B2B. And so to help enable that we actually most recently purchased Pardot to help improve our ability to generate and nurture high quality B2B leads for our sales team. And then in addition, we're really working to continue to enhance our CRM platforms across board to improve our team's ability to more efficiently deliver the world-class customer experience that we're known for. Drinker: Yeah. And again, we've talked a lot about some of our other trailblazers who have been doing the same and putting instead of kind of product at the center, putting the customer at the center to make sure you're rallying around that customer and ensuring they're getting the right customer experiencing using the kind of technology that we have on the backend. And maybe a different approach, which is kind of the employee at the center. How is the role of your employees changed during this pandemic? Belote: Yeah, so our CEO's rallying cry through this time has really been that we all have to keep rowing until the wind catches our sails. So that's kind of been his motto, as we've kind of gone through this period. And so everyone's really embraced that mentality along with really continuing to live by our core values. Some of those key values are embrace change, be a team player, and believe it's possible. And so the combination of those things has really helped us work through these very challenging times. And we really had to lean into our values to really power through this storm. Denman: How has the pandemic changed your global strategy and vision, and what's next? What does success look like for you all? Belote: Yes, our strategy stays the same. So really our aim is to become the go-to brand for flexible workspace solutions. So we want to really help individuals stay active throughout their day and help high-growth businesses offer their employees a flexible workspace. You know, various spaces is evidence of this evolution that we've gone through as a company. It's a very important endeavor for us as it allows us to showcase how well our products and services work in this model. And so we see tremendous growth potential in the Vari space model, and we will continue to look for opportunities to offer high growth businesses fully furnished workspaces with those world-class amenities and flexible lease terms in markets across the globe. Drinker: Yeah. I love the expansion of the businesses that makes such a natural kind of sense to expand, especially in these needs as there's kind of these office needs as well as kind of home office needs. I have one more question for you as we're kind of wrapping up. Any advice for other brands that you have during this time? Belote: I think my biggest piece of advice, maybe from a technology perspective, is really that you pick your technology vendors wisely and really treat them as partners versus just vendors. And so we've really established an amazing partnership with Salesforce. Our Salesforce account team has been unbelievable, not only during a rollout, but as we continue to help innovate and maximize the value we're getting out of the platform. So really just building that partnership where we all win together kind of mentality. Drinker: That's great. Well, thank you again, Jason, for joining us and thank you all for listening in. With that, our session I think is coming to an end, but our path together doesn't end here. I want to make sure you connect with us so we can help you create a tailored plan to accelerate your digital transformation and get you on the path to growth. We just announced Dream Force to you, our Dream Force experience re-imagined. It will be customized digital experience to inspire, connect and draw the blueprint for how to succeed in this moment. It's an experience for you that you won't want to miss. And then last month we had our first annual industry summit and event dedicated to helping you speed up your organization's digital transformation. And if you missed it, it's okay because we have all the sessions on demand. So check it out now and thank you all. We look forward to connecting with you soon and thank you for our sponsors. So I'll turn it back over to them. Denman: Hey guys, great presentation. We are almost out of time, but I think we have time for at least one, maybe two questions from the audience. And we have one here for Jason. Obviously Vari has two distinct business models, selling direct to business and then also selling to individuals looking to build out their home office. Can you talk a little bit about the difference in those two businesses. The needs of the CRM changed depending on what side you're dealing with, because obviously a home user probably is not a repeat business very quickly versus, like a corporate account. Belote: Yeah. It's definitely a challenge. So, our B2C model still continues to serve as well, especially during these times with the work from home programs. Our flagship product, the desktop converter still sells well direct to consumer. But really our company strategy is to move more to that B2B space where we can outfit entire companies with our furniture and really offer our flexibility and all that stuff to our customers. And so, within our CRM; I had mentioned we're moving to Pardot, and one of the main reasons is really to kind of pivot to that B2B structure. And so we definitely have to support both worlds. So we have a lot of B2B focused functionality, around our accounts and contacts. And then we also have to serve our fans that are calling into our customer experience team. So it's definitely a challenge and we continue to work and evolve that solution. Denman: Gotcha. So thank you for that. I want to thank Jason and Alex for taking some time to talk with us today. Thank everyone for listening, and thank you Salesforce for sponsoring.

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